Net Livret A inflows reached almost 2 billion euros in July. This was down on previous months, but still high for this time of year. Fearing the onset of a 2nd epidemic wave and a further deterioration in the economy, households invested massively in their Livret A savings accounts. The year 2020 promises to be exceptional for this savings product.
Sharp rise in deposits in the first half of 2020
Since the start of the year, the French have deposited far more money than they have withdrawn from their Livret A passbook accounts. According to Banque de France figures, they have already placed 100 billion euros in deposits over the 1st half of the year. Over this period, sight deposits increased by 60 billion euros, while interest-bearing bank deposits swelled by 35 billion euros.
Amounts invested in Livret A passbook savings accounts have continued to grow in recent months. In July, net inflows (deposits minus withdrawals) remained largely positive, at 1.85 billion euros, as shown by the latest figures published by the Caisse des Dépôts et Consignations. In total, since the beginning of the year and despite the period of confinement, 22.25 billion euros have been collected.
Slight slowdown compared with June
While net inflows in July remain high, having been exceeded only twice in the past (in 2011 and 2012), they have slowed slightly compared to June (around 3 billion euros) and sharply compared to April and May (5.4 and 3.9 billion euros respectively). In fact, the confinement imposed to cope with the health crisis led the French to "forced savings". Not since January 2013 (8.2 billion euros) have these levels been reached.
A historic success
Considered a safe-haven investment, the Livret A is enjoying historic success against a backdrop of economic and health uncertainties, and despite a low interest rate of 0.5% per annum. The same trends can be observed for the Livret de développement durable et solidaire (LDDS), which follows similar rules to the Livret A (rate, tax exemption). Between them, these two investments recorded net inflows of 2.49 billion euros in July, and 28.61 billion euros since January 2020.
The influx of savings generated by the Covid-19 crisis has not benefited all investment vehicles. For example, euro-denominated life insurance funds saw an outflow of almost 5 billion euros in the 1st half of the year. Figures published by the Fédération française de l'assurance (FFA) nevertheless point to a slight revival in investor interest in these investments. In June, payments into life insurance policies jumped by 9.9 billion euros, almost double the figure for the previous month (+5.7 billion euros). The FFA attributes this recovery to the reopening of insurance branches and banks, and to the lifting of traffic bans.